Personal Financial Planning
Advisory Services

These advisory services are about the management of money and the decisions that are made by individuals and families. We approach personal financial planning holistically – meaning that we understand that the subject matter is vast and it is our responsibility, in collaboration with our clients to unpack and comprehend the impact of decisions across a wide range of disciplines.

Our advisory services are fee-based (monthly retainer), based upon the selected bundle of services and reviews selected. These bundled services allow our clients to access professional services within the constraints of their budget. These services may include:-

Financial management

Management of one’s own personal financial affairs is the starting point in any holistic financial plan. How each individual perceives his or her personal philosophy towards financial planning is the starting point for all aspects of planning.

Risk Planning

Personal Risk Planning concerns the proactive choice for consumers to consider the financial, practical and emotional consequences to themselves, their family business partners and other connected associates in the event of:-

Death

In the event of your demise, what assets can be used to generate an income to support your family? This could include your liquid or share investments, business assets, property, and assurance policies and so on. These “investments” can be re-invested to produce an income or may already produce an income. Taking this all into account, what income is NEEDED and will there be enough?

Permanent or temporary disability

In the event of your permanent/temporary disability, what assets can be used to generate an income to support you in your changed circumstances and your family? This could include your liquid or share investments, business assets, property, and assurance policies and so on. These “investments” can be re-invested to produce an income or may already produce an income. Taking this all into account, what income is NEEDED and will there be enough?

Illness or dreaded disease

If you have sufficient medical scheme cover and lump-sum disability assurance or income protection, your medical expenses and your loss of income in the event of a serious illness should be covered. Why, you may ask, do you need critical illness (dreaded disease) cover as well?

The providers of severe illness policies all agree that medical scheme cover, disability or income protection cover and severe illness cover serve different needs. A medical scheme can cover you for the medical expenses associated with your illness, subject to certain rules and limitations, but your scheme may not meet all your medical needs. Severe illness cover can make up the shortfall.

Accident

Retrenchment

Chosen event

These are some of the issues that should be considered from a RISK viewpoint.

What If!

Health Planning

Health Planning concerns the financial implications of general health management by looking at health services, minimum care and the need for medical aid and Gap cover products.

Much debate surrounds being “self-insured” for medical care! From a planning viewpoint, each person is unique and medical aid and health-care, pre and post retirement, are critical planning considerations.

If you are approaching 65 years and worried about how retirement will affect your medical aid, you need not be too concerned because medical aids are not like other financial products such as life insurance or hospital cash back plans. Your medical aid cover is not going to be reassessed, your monthly premiums will not increase and your cover will not fall away simply because you are now a senior citizen. However, there are other concerns about how retirement affects your medical aid if you are on a company medical aid or if you are looking for a medical aid for pensioners without previously having cover. Of course, there are the money concerns in retirement and to some medical aid seems like an unnecessary frill but realistically speaking, it is an essential cover for older people.

Medical Aid Continues Once Retired

Any person of any age and health status can join a medical aid in South Africa but there are certain factors that can impact on immediate cover or price. If you join after the age of 35 years then you will pay a late joiner penalty which will be included in your monthly premium. This does not apply if you are switching from one medical scheme to another. If you join a medical aid with a pre-existing condition then it is excluded from cover for the first year of membership.

Therefore a person should do the utmost to keep their current medical aid, or switch over to cheaper cover if necessary, but not terminate membership at any point with the idea of joining later. It is therefore important for seniors to plan their retirement budget carefully to ensure that they can afford medical aid throughout their retirement. The cover continues only for as long as you keep paying the monthly contributions. Retirement may be a period where you live on a tight budget but the senior years are a time when one is in their poorest health in life.

Company medical aid after retirement

In most instances your membership to a company medical aid does not end with retirement. But this is no guarantee of your employer’s subsidy towards your monthly contribution. Remember that it is not mandatory for an employer to provide medical aid for a worker. Most employers do so in the form of a subsidy as an added benefit within a worker’s remuneration package. It is a perk on your salary rather than an essential fund that your employer has to contribute towards to as is the case with pension and unemployment insurance.
Therefore the employer’s contribution towards medical aid after retirement may fall away and it is important to clarify this point with an employer prior to retiring. However, many employers do continue Subsidising medical aid premiums of their retired staff making the cover more affordable for a senior who is no longer economically active! Company medical aids, even restricted medical aids, do not end your membership after retirement although they only cover members who work for the specific company, industry or part of a professional organisation.

Affording Medical Aid during Retirement

Whether you have a private pension fund or retirement annuity, the fact is that most seniors live on a tight budget once they retire. Medical aid takes away money that is needed for living costs but it should be considered an essential monthly expense. Take this into consideration – most diseases, especially chronic illnesses like diabetes and life-threatening conditions like cancer, are likely to arise or worsen after the age of 60 years. And even if it is not related to a disease, the age-related changes in your body also mean that you need quality medical care.

However, quality medical care in South Africa usually means private healthcare. And private doctors, treatment in private hospitals and medication from private pharmacies is expensive. In fact, it is quite unaffordable in South Africa without the help of a medical aid. On the other hand, less than 10% of South Africans can truly afford to retire with sufficient money to attend to their needs. Medical aid may seem like a financial burden but without it, the years after retirement would be fraught with sitting in long lines at government clinics and languishing in overcrowded and poorly staffed government hospitals.

Investment Planning

Objective based investment planning must evaluate a range of issues including the effects that any investment may have on:-

Income Tax

Capital Gains Tax

Donations Tax

Risk

Estate Duties

Your Will

To name a few.

Developing an investment strategy is a key element of financial planning.

Your investment strategy will provide guidance for all future decisions as it contextualises your financial situation and sets out a way of achieving your financial goals in line with your time horizon and ability to tolerate investment risk and market volatility. There is often a tradeoff to be made between the investment returns required to meet your future expense goals and the investment risk required to deliver that return.

Information about the behaviour of financial markets has been gathered for the past 100 years. In the process, a significant amount of knowledge has been obtained about the behaviour of different asset classes both in terms of their performance characteristics and in terms of their correlation to each other. So, whilst we do not know what is going to happen in the markets from one day to the next, what we do know is how different asset classes behave over time and how they behave relative to each other. Research has also shown that diversity is the antidote to uncertainty and a key investment principle is ensuring that your portfolio is diversified across asset classes, geographical regions and portfolio managers.

Armed with this knowledge, it is possible to produce asset allocation models that combine different asset classes in an investment portfolio to meet specific investment requirements for the lowest possible investment risk. This modelling is based on the efficient frontier and we have partnered with a specialist investment advisory firm who have the capability, expertise and tools to determine the optimal asset allocation to achieve the rate of return you require meeting your financial goals.

Once the asset allocation work has been done it is imperative to select appropriate underlying portfolio managers who are going to manage the different asset class portfolios. When selecting portfolio managers one should look for those who have proven consistent performance track records, a sustainable edge and a passion for investing. We believe that researching and monitoring the universe of portfolio managers is a specialist skill and we have therefore partnered with an organisation that specialises in manager research and who has the expertise and experience to ensure the most appropriate managers are chosen to manage your assets.

Finally it is imperative to view your investment over the minimum timeframe required to achieve your identified objective(s). Your portfolio will experience short-term fluctuations, it is at these times that you must not let emotions influence your decision-making but rather focus on the long-term objectives you have set for yourself.

Retirement Planning

Objective based investment planning must evaluate a range of issues including the effects that any investment may have on:-

Income Tax

Capital Gains Tax

Donations Tax

Risk

Estate Duties

Your Will

To name a few.

Developing an investment strategy is a key element of financial planning.

Your investment strategy will provide guidance for all future decisions as it contextualises your financial situation and sets out a way of achieving your financial goals in line with your time horizon and ability to tolerate investment risk and market volatility. There is often a tradeoff to be made between the investment returns required to meet your future expense goals and the investment risk required to deliver that return.

Information about the behaviour of financial markets has been gathered for the past 100 years. In the process a significant amount of knowledge has been obtained about the behaviour of different asset classes both in terms of their performance characteristics and in terms of their correlation to each other. So, whilst we do not know what is going to happen in the markets from one day to the next, what we do know is how different asset classes behave over time and how they behave relative to each other. Research has also shown that diversity is the antidote to uncertainty and a key investment principle is ensuring that your portfolio is diversified across asset classes, geographical regions and portfolio managers.

Armed with this knowledge, it is possible to produce asset allocation models that combine different asset classes in an investment portfolio to meet specific investment requirements for the lowest possible investment risk. This modelling is based on the efficient frontier and we have partnered with a specialist investment advisory firm who have the capability, expertise and tools to determine the optimal asset allocation to achieve the rate of return you require meeting your financial goals.

Once the asset allocation work has been done it is imperative to select appropriate underlying portfolio managers who are going to manage the different asset class portfolios. When selecting portfolio managers one should look for those who have proven consistent performance track records, a sustainable edge and a passion for investing. We believe that researching and monitoring the universe of portfolio managers is a specialist skill and we have therefore partnered with an organisation that specialises in manager research and who has the expertise and experience to ensure the most appropriate managers are chosen to manage your assets.

Finally it is imperative to view your investment over the minimum timeframe required to achieve your identified objective(s). Your portfolio will experience short-term fluctuations, it is at these times that you must not let emotions influence your decision-making but rather focus on the long-term objectives you have set for yourself.

Estate Planning

Estate planning is the process of anticipating and arranging for the disposal of an estate during a person’s life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximise the value of the estate by reducing taxes and other expenses.

Estate Planning activities entail anticipating the effect on a planners estate having regard to the regulations and law surrounding the complex nature of financial issues surrounding Estate Duty, Capital Gains Tax, Trusts and Wills and the consequences thereof

With over 30 YEARS experience, our Fiduciary Services specialist is well placed in advising around all aspects of Estate Planning and Administration, Trusts and Administration, Wills and related matters. A unique advantage is that Mike has been involved in fiduciary serves at all levels of administration – at the coal face as well as assisting his clients with planning and managing the estate planning process over the long term.

Estate planning Services are one of the most complex combinations of services that touches across a wide range of disciplines and laws and the ability to be able to understand and plan ahead is based upon actual administration experiences ensures extraordinary and practical application of laws.

These services are available under selected Advisory Level options.

For example:-

Estate Planning pulls all the other disciplines together and specific areas of planning are focused on which include liquidity analysis, estate duty planning, wills and trusts.

Estate Duty is a capital tax that is payable in the event of your demise. If your NET estate (Assets less liabilities) exceed R 3,500,000 (this includes life assurance), then there is a possibility that estate duty (rate of 20%) may be payable in your estate. Estate Duty planning looks at the various ways in which estate duty can be minimised by understanding the allowable deductions and what assets can be more effectively structured – including your Will!

In short, Capital gains tax (CGT) is not a separate tax but forms part of income tax. A capital gain arises when you dispose of an asset on or after 1 October 2001 for proceeds that exceed its base cost.

Group or Corporate benefit Schemes

Group benefits services for employers involve a range of financial product solutions, analysis, maintenance and management including advice to both the employer as well as the employees of the organisation. Both employer and employees are serviced. This may involve group and “grouped” individual products and services such as:-

Pension Fund (Approved)

Provident Funds (Approved)

Hybrid Funds (Approved)

Grouped individual retirement schemes

Group medical Aid schemes

Grouped individual medical aid schemes

Business Assurance

Business assurance refers to a range of both assurance and investment products that are structured to meet specific objectives of a business and the needs of the owners or partners. This may involve the structuring of products under specific legal agreements to achieve desired outcomes – all of which have consequences in respect of Estate Duty, Income Tax, Capital Gains Tax, liquidity, business continuity and succession.

Business assurance MUST be analysed and considered taking into account a larger picture – a holistic viewpoint. Business assurance alone may refer to:-